a) Causes

a) factors which could cause economic growth

b) the distinction between actual and potential growth

short-run economic growth

• caused by an increase in AD

  • AD curve shifts right

  • PPF point shifts closer to the curve

long-run economic growth

• caused by an increase in LRAS

  • LRAS curve shifts right

  • PPF curve shifts outwards

actual growth = increase in the real value of goods/services

• increases RGDP

potential growth = increase in the maximum productive potential of the economy